Presidential Elections Don’t Hurt Home Sales

By Alex Thomas and Alexander Shaban

Key takeaways

• The annual seasonal decline in home sales is no worse in election years than in non-election years, according to 35 years of data.
• Greater-than-expected seasonal declines in home sales mostly reflect poor economic conditions (recessions or other downturns).
• Ignore the loudest voices in the room: home purchases are usually life decisions rather than political ones.

Presidential elections have little impact on home sales in the 5 months leading up to elections

Every 4 years, we and our clients are inundated with anecdotes about potential homebuyers who claim to be putting their home purchase decision on hold until after an upcoming election. Political uncertainty and negative campaigning undoubtedly weigh on consumer confidence, as evidenced by work from researchers at the University of Chicago. But do these potential buyers have any bearing on overall home sales?

We have found that this type of buyer is the exception rather than the rule. To assess the impact of presidential elections on home sales, we compared the non-seasonally adjusted, year-over-year change in new and existing home sales in the 5-month period* leading up to November (the month an election is held during an election year). We found the following:

• In non-election years, new home sales decline by -14% on average, and existing home sales decline by -22% on average.
• In election years, new home sales decline by -10% on average, and existing home sales decline by -19% on average.

The chart below visualizes the lack of relationship between home sales and presidential election years. We find:

• 3 elections where home sales fell less than seasonally expected: 1992, 2004, and 2020
• 3 elections where home sales fell in line with seasonal expectations: Home sales appeared normal in 1996, 2012, and 2016.
• 2 elections where home sales fell more than seasonally expected: The leadup to the elections of 2000 (Bush vs. Gore) and 2008 (Obama vs. McCain) both coincided with recessions, which caused home sales to decline more drastically than normal.

A greater-than-seasonally-expected slowdown in home sales is more correlated with a weak economy than presidential elections

The red dots in the scatterplot below represent years associated with an official recession or another significant downturn (such as in 2018, when economic data in 3Q/4Q were particularly weak).

As expected, red downturn years are clustered in the bottom-left corner, which indicates a greater-than-seasonally-expected slowdown in both new and existing home sales. Home sales are often a leading or coinciding indicator of broader economic distress, as consumers defer large purchases due to economic uncertainty or simply a lack of steady income.

Personal circumstances drive home purchase decisions more often than politics

While political discourse can be loud and pervasive, it rarely translates into significant changes in homebuying behavior.

Some agents from our Real Estate Agent Survey have been reporting hesitation among buyers due to the political climate this year.

But be wary of extrapolating broader trends from these anecdotes—the data just doesn’t back it up.

Researchers from the University of Chicago found that elections influence consumer sentiment much more significantly than consumer spending. Our analysis of home sales in the months leading up to the presidential election supports this finding.

In fact, our New Home Trends Institute finds that just 8% of consumers claim to be deferring their home purchase specifically due to the presidential election (and this is likely an overstatement). Put another way, we find that 92% of consumers are not postponing a home purchase due to the presidential election.

Of course, some buyers will defer home purchases based on politics, and these buyers tend to be vocal about their reasoning, creating the perception that their impact is greater than it actually is. Be cautious about overstating these buyers’ impact on broader housing demand when the data says otherwise.

We track 400+ leading economic and housing indicators every month in our research reports, which inform our thesis and forecasts. We will continue to monitor the housing market’s reaction to the upcoming presidential election.

*Note: We analyzed the change in new home sales contracts from June through October and existing home sales closings from August through December. Closings data reflect contracts signed ~2 months prior.